Delaware Business Taxes for LLCs
What taxes does a Delaware LLC pay? Learn about the $300 franchise tax, gross receipts tax, pass-through income reporting, and federal self-employment tax requirements.
Bizee Editorial Staff
Editorial Team
Delaware tax snapshot
Filing fee: $90 (LLC formation fee paid to the Delaware Division of Corporations)
Processing time: 3–5 business days standard; expedited options available
State agency: Delaware Division of Corporations / Delaware Division of Revenue
Annual report due: June 1 each year (franchise tax of $300 due at the same time)
State tax rate: No state income tax on LLC pass-through income at the entity level; graduated personal income tax rates apply to members on their share of profits; gross receipts tax rates vary by business activity
How a Delaware LLC is taxed
A Delaware LLC doesn't pay income tax at the entity level. Instead, profits pass through to the members, who report their share on their personal federal and state returns. On top of that pass-through income, Delaware LLCs owe a flat $300 annual franchise tax and may owe gross receipts tax depending on the nature of the business.
Delaware is well known as a business-friendly state, but that reputation mostly applies to corporations. LLC owners still have real tax obligations — federal self-employment tax, pass-through income tax, and the annual franchise tax are the ones that catch people off guard most often.
- Flat $300 annual franchise tax due June 1 each year
- No state-level income tax on the LLC itself — profits pass through to members
- Members pay Delaware personal income tax on their share of LLC profits
- Members pay federal self-employment tax (15.3% on net earnings up to the Social Security wage base)
- Gross receipts tax applies to most businesses operating in Delaware
- Payroll taxes apply if the LLC has employees
Delaware franchise tax
Every Delaware LLC owes a flat $300 annual franchise tax, regardless of revenue, assets, or activity. It's due by June 1 each year and paid to the Delaware Division of Revenue. If you miss the deadline, Delaware charges interest at 1.5% per month on the unpaid balance.
You can file and pay online through the Delaware Division of Corporations portal. The $300 is the same whether your LLC earned $500 or $5 million — it's a flat fee, not a percentage of income.
Delaware gross receipts tax
Delaware doesn't have a sales tax, but it does have a gross receipts tax — a tax on total revenue from business activity in the state, not on profit. Rates vary by industry and business type.
How often you file depends on your average monthly liability. If it exceeds $400 per month, you file monthly. Between $100 and $400, you file quarterly. Under $100, you file annually. Payments are due by the 20th of the month following the reporting period.
State income tax
Delaware has a graduated personal income tax. Because LLC profits pass through to members, each member pays Delaware personal income tax on their share of the LLC's income at their individual rate. The LLC itself doesn't file a Delaware income tax return — the obligation sits with the members.
Federal taxes for LLC owners
Federal tax treatment depends on how many members your LLC has. Single-member LLCs are treated as disregarded entities — the owner reports LLC income directly on Schedule C, E, or F of their Form 1040. Multi-member LLCs are treated as partnerships and file IRS Form 1065 annually, then issue a Schedule K-1 to each member showing their share of income, deductions, and credits.
On top of income tax, LLC members who are active in the business owe self-employment tax — 15.3% on net earnings up to the Social Security wage base, then 2.9% above that. Federal taxes can get complicated depending on your situation, so a tax professional can help you figure out what you owe and whether any elections (like S Corporation status) make sense for your business.
Payroll and employer taxes
If your Delaware LLC has employees, you're responsible for withholding and remitting payroll taxes. That includes federal income tax withholding, the employer's share of Social Security and Medicare (FICA), federal unemployment tax (FUTA), and Delaware state income tax withholding.
You'll also need to register with the Delaware Division of Revenue for withholding tax purposes and may need to carry workers' compensation insurance. A payroll provider or accountant can help you stay on top of deposit schedules and filing deadlines — getting payroll wrong can mean back taxes, penalties, and interest.
Estimated taxes
Most LLC owners need to pay estimated taxes quarterly — both to the IRS and to the state of Delaware. Because no employer is withholding taxes from your income, you're responsible for making those payments yourself throughout the year. If you underpay, you can owe a penalty when you file your annual return.
A tax professional can help you figure out the right quarterly amounts based on your projected income and deductions.
FAQ
Yes. Delaware LLCs owe a flat $300 annual franchise tax due June 1 each year, and may owe gross receipts tax depending on business activity. The LLC itself doesn't pay income tax — profits pass through to members, who pay federal and Delaware personal income tax on their share.
No. Delaware doesn't have a sales tax. Instead, it levies a gross receipts tax on total business revenue. Rates vary by industry, and filing frequency depends on your average monthly tax liability — monthly, quarterly, or annually.
Yes. Delaware has a graduated personal income tax. LLC members pay Delaware personal income tax on their share of the LLC's profits. The LLC itself doesn't file a state income tax return — the tax obligation passes through to each member individually.
The Delaware franchise tax for an LLC is a flat $300 per year, due by June 1. It applies regardless of revenue, assets, or whether the LLC was active during the year. If you miss the June 1 deadline, Delaware charges interest at 1.5% per month on the unpaid amount.
Yes, in most cases. LLC owners who expect to owe $400 or more in federal self-employment tax need to make quarterly estimated payments to the IRS. Delaware also requires estimated state income tax payments. A tax professional can help you figure out the right amounts based on your projected income.
Delaware doesn't have a separate self-employment tax — that's a federal obligation. Active LLC members owe federal self-employment tax of 15.3% on net earnings up to the Social Security wage base, then 2.9% above that. Members report this on their federal Form 1040 and pay Delaware personal income tax on the same earnings.
A multi-member Delaware LLC files IRS Form 1065 each year and issues a Schedule K-1 to each member. The K-1 shows each member's share of income, deductions, and credits. Members then report that information on their personal federal Form 1040 and pay income tax at their individual rate.
